Research shows most stocks haven’t outperformed Treasury bills

Professor of Finance Hendrik Bessembinder says the issues raised in his paper are more worrisome for institutional investors because of the long-term nature of their investment strategies.

The much-publicized research paper "Do stocks outperform Treasury bills?" by Professor of Finance Hendrik Bessembinder examines skewness in stock returns and casts doubt on the expectation that most stocks will outperform bonds in the long run. It also shows that among the nearly 26,00 companies that issued stocks from 1926 to 2016, only five of them accounted for 10 percent of shareholder wealth creation.

In an article Dec. 10, 2018, on Pensions&Investments:

These issues affect a long-horizon investor more because this phenomenon that I'm describing is more notable over longer-term horizons. When we compound returns over time, the phenomenon is more recognizable.

– Hendrik Bessembinder, who is the Francis J. and Mary B. Labriola Endowed Chair in Competitive Business